The High Court has ordered that the Bank of Namibia stops halt its action against Trustco, and find an alternative banker to do their transactions in Namibia.
The High Court order yesterday follows a fresh application in an amended notice a day before by the Bank of Namibia to have Trustco placed under provisional order of winding-up in the hands of the Master of the High Court.
Collexia, a client of Trustco, won an application in the High Court preventing and stopping the central bank from its intentions to take steps against the private bank.
Collexia brought the application on 13 October to among others prevent Bank of Namibia to liquidate Transco Bank, through which they are doing their transactions until they have an alternative banker.
BoN has appealed the decision of the High Court, which effectively stays the High Court order.
In a statement on 28 September, the Bank of Namibia that the central bank has recommended measures to Trustco Bank such as recapitalising the bank, which was not done in full as expected, and instead provided a business plan which they claimed would secure a sustainable turnaround, which the BoN regarded as inadequate.
‘’ The primary goal of the legal action by BON is to preserve the trust and confidence in the financial sector, and more particularly that of Namibian banks. The liquidation application as such is the culmination of a series of regulatory engagements and interventions that have failed to restore TBN’s governance and viability to acceptable regulatory levels since 2020,’’ the central bank explained in the statement explaining the reason for the liquidation option.
The central bank further said that there were severe flaws in the bank’s risk management practices and systems, its failure to maintain liquidity ratios with the prescribed ratios, and failure to comply with agreed upon directives to re-capitalise the institution.
Meanwhile, Trustco has lodged an appeal against the Namibia Revenue Authority over its debt to the taxman, which the Bank of Namibia has pointed out as one of the risk factors, including its debt with the Development Bank of Namibia.